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Wool market tops 1300c/kg

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Bob GarnantThe West Australian

The Australian wool market lifted again last week, rising 46 cents/kg clean, with the Eastern Market Indicator closing at 1304c/kg, defying the devaluation of the Chinese renminbi.

The Australian Wool Exchange put the offering at 28,515 bales, the smallest three-centre total in four years.

"Although the final results in Australian dollar terms was similar to the previous sale, the devaluation of the Chinese renminbi had its biggest one-day adjustment in 20 years," an AWEX spokesman said.

The National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said the Chinese devaluation would have disadvantaged Chinese exporters and further devaluation is expected.

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"The Australian wool industry may need to start reporting the Eastern Market Indicator in Chinese renminbi, as well as US dollars, if the Chinese currency peg is removed," he said.

"While the Chinese renminbi fell against the US dollar due to the devaluation, it also declined by 3.9 per cent against the Australian dollar and the EMI lifted by 7.7 per cent in renminbi terms, compared with the 3.7 per cent in Australian dollar terms."

Mr Wilcox said China Wool Textile Association June wool trade data showed China's raw wool imports increased 39 per cent.

"This is the fourth consecutive month that China's total raw wool imports have been above year-earlier levels," he said. "As a result, in the first half of 2015, China's imports of raw and semi-processed wool were 200 million kg 21 per cent higher than the same six months of 2014.

"This is the highest volume of wool imported by China in the first half of the calendar year since at least 2008."

Mr Wilcox said at the same time of this sharp increase, China's exports of wool products fell, with wool top exports down 9 per cent, wool yarn falling 6 per cent, wool fabric exports down 11 per cent and woven wool clothing declining by 3 per cent.

"Of most concern was that China's exports of wool sweaters were down by 5 per cent in the first six months of 2015," he said.

Mr Wilcox said the Western Wool Market Indicator increased by 82c/kg clean last week as it played catch-up after a one-day sale held on Wednesday the previous week.

Katanning wool grower Kim Noonan was pleased his 38-bale Carbury clip consignment sold strongly at the Western Wool Centre through Elders.

All four lines sold near the 1000c/kg greasy price with a two-bale consignment of 17.9-micron wool achieving a 1025c/kg greasy top price.

"We been holding our breath a long time for a good spike in the wool market," he said.

Mr Noonan, with parents Terry and Helen and sheep manager Karryn Stephens, run a 2500 self-replacing Merino flock on a 55/45 cropping/sheep program.

Elders WA wool manager Danny Burkett said the driver for the rising wool market was limited supply, which pushed the market over 1500c/kg clean for a 21-micron Merino fleece recently.

"The lack of supply issue for stocks in China and throughout the pipeline has not been resolved and major wool selling countries had little or no wool in recent months," he said.

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